钢铁业第2季标青的考量 (Final)- YiStock

This is the last article that i intend to share with INVESTORS about
steel industry. I hope more consideration will be put in if you intend
to treat this industry as "long term investment"

This media is released by MITI on 23 May 2016
The anti-dumping duty on "Cold Rolled Coil" has been finallized and to
last for 5 years from 24 May 2016 to 23 May 2021 at above quantum. (No
mentioned on Scrap/ Iron ore -based CRC)

More points of consideration extended from above
1) The anti-dumping investigation on "CRC" was initiated on 27th May
2015 and undergone for nearly one whole year before the above media
released on 23 May 2016. Quite a big issue during this period. Possible to cause any local shortage of steel due to market panic? The investigation has now stopped.
2) For China,5.61% only.
I'm not very sure if this 5.61% is consider high or low from the point
of Malaysian Up Stream manufacturer like CSC Steel and Mycron.
(The reason why i dont want to focus on the 23.78% imposed on others
producers/ exporter is because 5.61% is where the risk is to Malaysia
steel players. If you can't beat this 5.61%, you will be dead soon)
3) Also, if not mistaken, China CRC price is much lower compared to
international price. Is the 5.61% imposed on their invoicing price? Very
likely. By factor this duty in, is Malaysia players competitive or still not so competitive?
Bengang Steel Plate belongs to BenxiSteel Group and it belongs to china
government if i interprete below correctly. The annual production
capacity is 20 mil tones. Is way much bigger than Malaysia players.
CSC Steel's customer with enough volume may not want to take from him
if the price (including anti-dumping duty) offered by Bengang Steel is
much more competitive compared to CSC Steel. Right?
We still have other option like Korea Posco at 3.78% and Vietnam at 3.06%

Since they are the biggest, so i assumed thier price will be among the most competitive.
4) NOW, IF I INTERPRETE CORRECTLY, For those mid stream players with
order volume, they may source from the big boy and pay 5.61%. If you do
not have volume, i assume you have no choice but to get from second big
and pay 13.44%. If you seriosly no volume, you have to pay 23.78% (the
highest). What you get, will eventually passed down to down stream
customers. This will likely become another price squeezing game. Margin
may not be able to sustain.
5) The Anti-dumping duty WILL NOT BE IMPOSED ON tin mill black plate and most importantly, AUTOMATIVE. I'm not able to dig on this part as i assumed that is too big and too wide. Since
there is not anti-dumping duty on this part, i think whoever has this
group of customer may lose out a big chunk from this.
6) PLUS, is the CRC for automative eventually 100% used for it purpose?
The margin has been squeezed from head to toe. Survivalship is more
important when the advantage is on buyer under over supply condition.
Perhaps other i3 forummer can do better estimation to factor in the most possible scenario based on above.
Below i extracted from Mycron website. The KEY, is on the cheap CRC.

THE POSITIVE ASPECT:
BELOW IS THE ANTI DUMPING DUTY FOR HRC.

Speculative Conclusion:
(1) I think for manufacturers using HRC as raw mat (such as CSC steel
& Mycron) , the key now is not only on the saving that may generate
if they able to source cheaper raw mat, but is also whether
their end product (CRC) will be able to defeat the CRC from "dumping"
countries at 5.61% extra dumping duty + existing 15% duty. Automative is
not subject to such anti-dumping duty.(2) Further room of rebate (including the 5.61%) by China when global steel price going up?(3) Margin Compression - This will directly come from Up stream
to down stream players from China. The closure of Megasteel implied
many uncertainty. 便宜买便宜卖。 市场很公开。 End users will demand better discount.(4) Are most of the players take advantage of recent price
hike? At least choo bee and mycron both show significant improved in
margin. (5) Can the saving from HRC beat everything?(6) Ultimate winner? End user of Steel Product I guess.
Construction players like gadang, gkent, kimlun, gamuda??? We shall see.
Thier margin has been expanding. (7) Best scenario, all are winners!!!

Cheers,
YiStock
Please Note: I have none of the steel counters, no intention to buy any either.

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